• Journal of the HCI Society of Korea
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• v.13 no.2
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• pp.31-44
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• 2018

In the IoT environment, various things could be connected. Those connected things learn and operate themselves, by acquiring data. As human being, they have self-learning and self-operating systems. In the field of IoT study, therefore, the key issue is to design communication system connecting both of the two different types of subjects, human being(user) and the things. With the advent of the IoT environment, much research has been done in the field of UI design. It can be seen that research has been conducted to take complex factors into account through keywords such as multi-modality and interusability. However, the existing UI design method has limitations in structuring or testing interaction between things and users of IoT environment. Therefore, this paper suggests a new UI prototyping method. In this paper, the major analysis and studies are as follows: (1) defined what is the behavior process of the things (2) analyzed the existing IoT product (3) built a new framework driving personality types (4) extracted three representative personality models (5) applied the three models to the smart home service and tested UI prototyping. It is meaningful with that this study can confirm user experience (UX) about IoT service in a more comprehensive way. Moreover, the concept of the personality of things will be utilized as a tool for establishing the identity of artificial intelligence (AI) services in the future.

• Journal of Distribution Science
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• v.14 no.7
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• pp.83-90
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• 2016

Purpose - This study focuses on new type distribution channel that named as Omnichannel. Omnichannel is developed from Multichannel which is used in many distribution channels to buy or selling goods. Omnichannel basically needs an Information and Communications Technologies(ICT) to use, so researcher conduct a Technology Acceptance Model(TAM) to research model. Customer-brand relationship was used as dependent variable to focus on the role of Omnichannel. Research design, data, and methodology - The subject of this study is customer who purchase goods or service through omnichannel. Based on the literature from the preceding research analysis of TAM and customer-brand relationship, this study was constructed by the reference to previous studies, final research model design for figure out casual relationship among perceived ease of use, perceived usefulness, omnichannel use and customer-brand relationship. From 2016 February 3 to March 17, questionnaire survey targeted customers who use online and offline channels. 273 questionnaire survey had conducted, then, 252 survey data were available for empirical analysis. Researcher provide descriptive statistics for checking generality. Cronbach's alpha value was used to check the reliability of data. Exploratory factor analysis was used for purification of values and eigenvalue checking. After EFA, Confirmatory factor analysis was used to prepare structural equation modeling with executing structural equation modeling for confirming hypothesis which developed by researcher. Results - The main results of this empirical study are as follows. First, omnichannel's perceived ease of use has positive significant effect on perceived usefulness(estimate: 0.579). Moreover, omnichannel's perceived ease of use and perceived usefulness has positive significant effect on omnichannel use(estimate: 0.325,0.648). Second, using omnichannel has positive significant effect on brand-customer relationship(estimate: 0.521). Every hypothesis adopted as researcher designed. This study found out the intermediate relationship between perceived ease of use and omnichannel use by investigating hypothesis. Conclusions - Base on the empirical result, this study confirmed that TAM theory perceived has relation with omnichannel. First, factors of TAM has positive effect on omnichannel use, so it highlights the important role of customer based interface and usefulness. Especially, perceived usefulness has high indirect influence on ease of use and use of omnichannel. It seems that when customers try to decide use or not use omnichannel, customers focus on percept benefits from omnichannel. Thus, a provider should applicate attractive price table, accurate product or service information and high switching cost strategy to emphasize the usefulness of omnichannel. Second, using omnichannel enhances the relationship between customers and brand, because there are more time and frequency to serve customers. It is important because good relationship between customers can increase the future's financial performance through word of mouse, positive brand image and loyalty to brand or company. Finally, despite of empirical result and implications, this study has limitations. First, there are only a few previous studies about omnicahnnel, so literature reviews are restricted. While set up the factors which can affect the use of omnichannel, next study should be considered with broader theories or models(ex: contingency theory). Second, omnichannel has developed from multichannel, so comparative analysis is needed between these methods because there is a possibility about different forte character of each distribution system on customer's consuming patterns.

• Asia pacific journal of information systems
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• v.23 no.3
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• pp.25-53
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• 2013

This study analyzes the effect of Computer Aided Innovation (CAI) to improve R&D Capabilities empirically. Survey was distributed by e-mail and Google Docs, targeting CTO of 235 SMEs. 142 surveys were returned back (rate of return 60.4%) from companies. Survey results from 119 companies (83.8%) which are effective samples except no-response, insincere response, estimated value, etc. were used for statistics analysis. Companies with less than 50billion KRW sales of entire researched companies occupy 76.5% in terms of sample traits. Companies with less than 300 employees occupy 83.2%. In terms of the type of company business Partners (called 'partners with big companies' hereunder) who work with big companies for business occupy 68.1%. SMEs based on their own business (called 'independent small companies') appear to occupy 31.9%. The present status of holding IT system according to traits of company business was classified into partners with big companies versus independent SMEs. The present status of ERP is 18.5% to 34.5%. QMS is 11.8% to 9.2%. And PLM (Product Life-cycle Management) is 6.7% to 2.5%. The holding of 3D CAD is 47.1% to 21%. IT system-holding and its application of independent SMEs seemed very vulnerable, compared with partner companies of big companies. This study is comprised of IT infra and IT Utilization as CAI capacity factors which are independent variables. factors of R&D capabilities which are independent variables are organization capability, process capability, HR capability, technology-accumulating capability, and internal/external collaboration capability. The highest average value of variables was 4.24 in organization capability 2. The lowest average value was 3.01 in IT infra which makes users access to data and information in other areas and use them with ease when required during new product development. It seems that the inferior environment of IT infra of general SMEs is reflected in CAI itself. In order to review the validity used to measure variables, Factors have been analyzed. 7 factors which have over 1.0 pure value of their dependent and independent variables were extracted. These factors appear to explain 71.167% in total of total variances. From the result of factor analysis about measurable variables in this study, reliability of each item was checked by Cronbach's Alpha coefficient. All measurable factors at least over 0.611 seemed to acquire reliability. Next, correlation has been done to explain certain phenomenon by correlation analysis between variables. As R&D capabilities factors which are arranged as dependent variables, organization capability, process capability, HR capability, technology-accumulating capability, and internal/external collaboration capability turned out that they acquire significant correlation at 99% reliability level in all variables of IT infra and IT Utilization which are independent variables. In addition, correlation coefficient between each factor is less than 0.8, which proves that the validity of this study judgement has been acquired. The pair with the highest coefficient had 0.628 for IT utilization and technology-accumulating capability. Regression model which can estimate independent variables was used in this study under the hypothesis that there is linear relation between independent variables and dependent variables so as to identify CAI capability's impact factors on R&D. The total explanations of IT infra among CAI capability for independent variables such as organization capability, process capability, human resources capability, technology-accumulating capability, and collaboration capability are 10.3%, 7%, 11.9%, 30.9%, and 10.5% respectively. IT Utilization exposes comprehensively low explanatory capability with 12.4%, 5.9%, 11.1%, 38.9%, and 13.4% for organization capability, process capability, human resources capability, technology-accumulating capability, and collaboration capability respectively. However, both factors of independent variables expose very high explanatory capability relatively for technology-accumulating capability among independent variable. Regression formula which is comprised of independent variables and dependent variables are all significant (P<0.005). The suitability of regression model seems high. When the results of test for dependent variables and independent variables are estimated, the hypothesis of 10 different factors appeared all significant in regression analysis model coefficient (P<0.01) which is estimated to affect in the hypothesis. As a result of liner regression analysis between two independent variables drawn by influence factor analysis for R&D capability and R&D capability. IT infra and IT Utilization which are CAI capability factors has positive correlation to organization capability, process capability, human resources capability, technology-accumulating capability, and collaboration capability with inside and outside which are dependent variables, R&D capability factors. It was identified as a significant factor which affects R&D capability. However, considering adjustable variables, a big gap is found, compared to entire company. First of all, in case of partner companies with big companies, in IT infra as CAI capability, organization capability, process capability, human resources capability, and technology capability out of R&D capacities seems to have positive correlation. However, collaboration capability appeared insignificance. IT utilization which is a CAI capability factor seemed to have positive relation to organization capability, process capability, human resources capability, and internal/external collaboration capability just as those of entire companies. Next, by analyzing independent types of SMEs as an adjustable variable, very different results were found from those of entire companies or partner companies with big companies. First of all, all factors in IT infra except technology-accumulating capability were rejected. IT utilization was rejected except technology-accumulating capability and collaboration capability. Comprehending the above adjustable variables, the following results were drawn in this study. First, in case of big companies or partner companies with big companies, IT infra and IT utilization affect improving R&D Capabilities positively. It was because most of big companies encourage innovation by using IT utilization and IT infra building over certain level to their partner companies. Second, in all companies, IT infra and IT utilization as CAI capability affect improving technology-accumulating capability positively at least as R&D capability factor. The most of factor explanation is low at around 10%. However, technology-accumulating capability is rather high around 25.6% to 38.4%. It was found that CAI capability contributes to technology-accumulating capability highly. Companies shouldn't consider IT infra and IT utilization as a simple product developing tool in R&D section. However, they have to consider to use them as a management innovating strategy tool which proceeds entire-company management innovation centered in new product development. Not only the improvement of technology-accumulating capability in department of R&D. Centered in new product development, it has to be used as original management innovative strategy which proceeds entire company management innovation. It suggests that it can be a method to improve technology-accumulating capability in R&D section and Dynamic capability to acquire sustainable competitive advantage.

• Science of Emotion and Sensibility
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• v.15 no.4
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• pp.503-516
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• 2012

According to the researches of robot and software agent until now, computational emotion model is dependent on system, so it is hard task that emotion models is separated from existing systems and then recycled into new systems. Therefore, I introduce the Engine of computational Emotion model (shall hereafter appear as EE) to integrate with any robots or agents. This is the engine, ie a software for independent form from inputs and outputs, so the EE is Emotion Generation to control only generation and processing of emotions without both phases of Inputs(Perception) and Outputs(Expression). The EE can be interfaced with any inputs and outputs, and produce emotions from not only emotion itself but also personality and emotions of person. In addition, the EE can be existed in any robot or agent by a kind of software library, or be used as a separate system to communicate. In EE, emotions is the Primary Emotions, ie Joy, Surprise, Disgust, Fear, Sadness, and Anger. It is vector that consist of string and coefficient about emotion, and EE receives this vectors from input interface and then sends its to output interface. In EE, each emotions are connected to lists of emotional experiences, and the lists consisted of string and coefficient of each emotional experiences are used to generate and process emotional states. The emotional experiences are consisted of emotion vocabulary understanding various emotional experiences of human. This study EE is available to use to make interaction products to response the appropriate reaction of human emotions. The significance of the study is on development of a system to induce that person feel that product has your sympathy. Therefore, the EE can help give an efficient service of emotional sympathy to products of HRI, HCI area.

• Journal of Environmental Health Sciences
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• v.46 no.2
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• pp.232-244
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• 2020

Objectives: The purpose of this study is to develop a management system for the safe handling of chemicals and related health management based on reporting under the Chemical Control Act (CCA). It is used to search handling information by constructing data linked to the name of companies, chemicals, products, etc. Methods: Due to the differences in submission periods for each reporting regulation of the Chemical Control Act, the data used is as follows: A statistical survey collected 26,222 companies in 2014 and 2016, Pollutant Release Transfer Registers (PRTR) collected 4,234 companies in 2015-2017, performance reports by handlers of hazardous chemical substances collected 14,658 companies in 2016-2018, and declarations for import of toxic chemicals collected 892 companies in 2016-2017. The total information on 36,080 companies is standardized based on company ID, name, business registration number, address, and more. The data were classified into information such as company, chemical, and product name and amounts handled and released, and then extracted according to criteria to establish relationships among classified information. Results: A search service was developed for handling information on chemical substances for reporting data by linking four reporting data: statistical survey, PRTR, performance report by handler of hazardous chemical substances, and declaration for import of toxic chemicals under the CCA. It was composed of five menus to search by regulation type, reporting regulation, companies and chemicals, and system management. Conclusion: It is necessary to use data linked by company, region, and chemical to respond and to prevent chemical accidents. In addition, these items can be utilized to perform handling and safety management of chemicals according to whether regulations under the CCA may be implemented.

• Journal of Science and Technology Studies
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• v.18 no.1
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• pp.177-217
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• 2018

This study examines the case of living lab applied in the R&D initiatives for solving societal problems and challenges. It discusses how to use the living lab in national R&D projects. The analyzed cases are 'Develop portable fundus camera for eye disease screening test to resolve health inequalities' and 'Auto-sensing integrated system development in rural pedestrian crosswalk'. As a result of the analysis, both cases were designed as a user participatory R&D structure by utilizing living lab. In other words, living lab has operated as a system that evolves technology-products-services into an infrastructure. It can realize final demand specification, product, service improvement and demonstration through continuous interaction of end users. As a result of the case analysis, the following policy tasks can be derived. First, living lab is a new concept and it is in the early stage of implementation in Korea. Therefore, it is necessary to monitor and evaluate living lab experiments and build suitable models for Korean society by sharing cases and achievements. Second, the strategic niche management are necessary for the introduction of living lab. Third, living lab can be used as a tool to transform the existing technology acquisition centered innovation policy to the policy for customer needs and problem solving. Fourth, there is a need for flexibility and adaptability in strategy and system to correct errors that appear in the living lab processes.

• Asia pacific journal of information systems
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• v.20 no.3
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• pp.139-166
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• 2010

The supply chain management (SCM) systems have emerged as strong managerial tools for manufacturing firms in enhancing competitive strength. Despite of large investments in the SCM systems, many companies are not fully realizing the promised benefits from the systems. A review of literature on adoption, implementation and success factor of IOS (inter-organization systems), EDI (electronic data interchange) systems, shows that this issue has been examined from multiple theoretic perspectives. And many researchers have attempted to identify the factors which influence the success of system implementation. However, the existing studies have two drawbacks in revealing the determinants of systems implementation success. First, previous researches raise questions as to the appropriateness of research subjects selected. Most SCM systems are operating in the form of private industrial networks, where the participants of the systems consist of two distinct groups: focus companies and vendors. The focus companies are the primary actors in developing and operating the systems, while vendors are passive participants which are connected to the system in order to supply raw materials and parts to the focus companies. Under the circumstance, there are three ways in selecting the research subjects; focus companies only, vendors only, or two parties grouped together. It is hard to find researches that use the focus companies exclusively as the subjects probably due to the insufficient sample size for statistic analysis. Most researches have been conducted using the data collected from both groups. We argue that the SCM success factors cannot be correctly indentified in this case. The focus companies and the vendors are in different positions in many areas regarding the system implementation: firm size, managerial resources, bargaining power, organizational maturity, and etc. There are no obvious reasons to believe that the success factors of the two groups are identical. Grouping the two groups also raises questions on measuring the system success. The benefits from utilizing the systems may not be commonly distributed to the two groups. One group's benefits might be realized at the expenses of the other group considering the situation where vendors participating in SCM systems are under continuous pressures from the focus companies with respect to prices, quality, and delivery time. Therefore, by combining the system outcomes of both groups we cannot measure the system benefits obtained by each group correctly. Second, the measures of system success adopted in the previous researches have shortcoming in measuring the SCM success. User satisfaction, system utilization, and user attitudes toward the systems are most commonly used success measures in the existing studies. These measures have been developed as proxy variables in the studies of decision support systems (DSS) where the contribution of the systems to the organization performance is very difficult to measure. Unlike the DSS, the SCM systems have more specific goals, such as cost saving, inventory reduction, quality improvement, rapid time, and higher customer service. We maintain that more specific measures can be developed instead of proxy variables in order to measure the system benefits correctly. The purpose of this study is to find the determinants of SCM systems success in the perspective of vendor companies. In developing the research model, we have focused on selecting the success factors appropriate for the vendors through reviewing past researches and on developing more accurate success measures. The variables can be classified into following: technological, organizational, and environmental factors on the basis of TOE (Technology-Organization-Environment) framework. The model consists of three independent variables (competition intensity, top management support, and information system maturity), one mediating variable (collaboration), one moderating variable (government support), and a dependent variable (system success). The systems success measures have been developed to reflect the operational benefits of the SCM systems; improvement in planning and analysis capabilities, faster throughput, cost reduction, task integration, and improved product and customer service. The model has been validated using the survey data collected from 122 vendors participating in the SCM systems in Korea. To test for mediation, one should estimate the hierarchical regression analysis on the collaboration. And moderating effect analysis should estimate the moderated multiple regression, examines the effect of the government support. The result shows that information system maturity and top management support are the most important determinants of SCM system success. Supply chain technologies that standardize data formats and enhance information sharing may be adopted by supply chain leader organization because of the influence of focal company in the private industrial networks in order to streamline transactions and improve inter-organization communication. Specially, the need to develop and sustain an information system maturity will provide the focus and purpose to successfully overcome information system obstacles and resistance to innovation diffusion within the supply chain network organization. The support of top management will help focus efforts toward the realization of inter-organizational benefits and lend credibility to functional managers responsible for its implementation. The active involvement, vision, and direction of high level executives provide the impetus needed to sustain the implementation of SCM. The quality of collaboration relationships also is positively related to outcome variable. Collaboration variable is found to have a mediation effect between on influencing factors and implementation success. Higher levels of inter-organizational collaboration behaviors such as shared planning and flexibility in coordinating activities were found to be strongly linked to the vendors trust in the supply chain network. Government support moderates the effect of the IS maturity, competitive intensity, top management support on collaboration and implementation success of SCM. In general, the vendor companies face substantially greater risks in SCM implementation than the larger companies do because of severe constraints on financial and human resources and limited education on SCM systems. Besides resources, Vendors generally lack computer experience and do not have sufficient internal SCM expertise. For these reasons, government supports may establish requirements for firms doing business with the government or provide incentives to adopt, implementation SCM or practices. Government support provides significant improvements in implementation success of SCM when IS maturity, competitive intensity, top management support and collaboration are low. The environmental characteristic of competition intensity has no direct effect on vendor perspective of SCM system success. But, vendors facing above average competition intensity will have a greater need for changing technology. This suggests that companies trying to implement SCM systems should set up compatible supply chain networks and a high-quality collaboration relationship for implementation and performance.

• Journal of Internet Computing and Services
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• v.24 no.6
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• pp.31-39
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• 2023

The purpose of this study is to propose a scientific performance evaluation framework for measuring and managing the overall outcome of complex types of projects that are linked to public demand-based commercialization, such as information system projects and public procurement, in integrated national R&D projects. In the case of integrated national R&D projects that involve multiple research institutes to form a single final product, and in the case of demand-based demonstration and commercialization of the project results, the existing evaluation system that evaluates performance based on the short-term outputs of the detailed tasks comprising the R&D project has limitations in evaluating the mid- and long-term effects and practicality of the integrated research products. (Moreover, as the paradigm of national R&D projects is changing to a mission-oriented one that emphasizes efficiency, there is a need to change the performance evaluation of national R&D projects to focus on the effectiveness and practicality of the results.) In this study, we propose a performance evaluation framework from a structural perspective to evaluate the completeness of each national R&D project from a practical perspective, such as its effectiveness, beyond simple short-term output, by utilizing the Hourglass model. In particular, it presents an integrated performance evaluation framework that links the top-down and bottom-up approaches leading to Tool-System-Service-Effect according to the structure of R&D projects. By applying the proposed detailed evaluation indicators and performance evaluation frame to actual national R&D projects, the validity of the indicators and the effectiveness of the proposed performance evaluation frame were verified, and these results are expected to provide academic, policy, and industrial implications for the performance evaluation system of national R&D projects that emphasize efficiency in the future.

• Journal of Distribution Research
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• v.17 no.5
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• pp.1-23
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• 2012

The conflict between major corporations and small and medium-sized businesses is being aggravated, the trickle down effect is not working properly, and, as the controversy surrounding the effectiveness of the business limiting system continues to swirl, the plan proposed to protect the business domain of small and medium-sized businesses, resolve polarization between these businesses and large corporations, and protect small family run stores is the suitable business type designation system for small and medium-sized businesses. The current status of carrying out this system of selecting suitable business types among small and medium-sized businesses involves receiving applications for 234 items among the suitable business types and items from small and medium-sized businesses in manufacturing, and then selecting the items of the consultative group by analyzing and investigating the actual conditions. Suitable business type designation in the service industry will involve designation with priority on business types that are experiencing social conflict. Three major classifications of the service industry, related to the livelihood of small and medium-sized businesses, will be first designated, and subsequently this will be expanded sequentially. However, there is the concern that when designated as a suitable business type or item, this will hinder the growth motive for small to medium-sized businesses, and designation all cause decrease in consumer welfare. Also it is highly likely that it will operate as a prior regulation, cause side-effects by limiting competition systematically, and also be in violation against the main regulations of the FTA system. Moreover, it is pointed out that the system does not sufficiently reflect reverse discrimination factor against large corporations. Because conflict between small to medium sized businesses and large corporations results from the expansion of corporations to the service industry, which is unrelated to their key industry, it is necessary to introduce an advanced contract method like a master franchise or local franchise system and to develop local small to medium sized businesses through a franchise system to protect these businesses and dealers. However, this method may have an effect that contributes to stronger competitiveness of small to medium sized franchise businesses by advancing their competitiveness and operational methods a step further, but also has many negative aspects. First, as revealed by the Ministry of Knowledge Economy, the franchise industry is contributing to the strengthening of competitiveness through the economy of scale by organizing existing individual proprietors and increasing the success rate of new businesses. It is also revealed to be a response measure by the government to stabilize the economy of ordinary people and is emphasized as a 'useful way' to revitalize the service industry and improve the competitiveness of individual proprietors, and has been involved in contributions to creating jobs and expanding the domestic market by providing various services to consumers. From this viewpoint, franchises fit the purpose of the suitable business type system and is not something that is against it. Second, designation as a suitable business type may decrease investment for overseas expansion, R&D, and food safety, as well negatively affect the expansion of overseas corporations that have entered the domestic market, due to the contraction and low morale of large domestic franchise corporations that have competitiveness internationally. Also because domestic franchise businesses are hard pressed to secure competitiveness with multinational overseas franchise corporations that are operating in Korea, the system may cause difficulty for domestic franchise businesses in securing international competitiveness and also may result in reverse discrimination against these overseas franchise corporations. Third, the designation of suitable business type and item can limit the opportunity of selection for consumers who have up to now used those products and can cause a negative effect that reduces consumer welfare. Also, because there is the possibility that the range of consumer selection may be reduced when a few small to medium size businesses monopolize the market, by causing reverse discrimination between these businesses, the role of determining the utility of products must be left ot the consumer not the government. Lastly, it is desirable that this is carried out with the supplementation of deficient parts in the future, because fair trade is already secured with the enforcement of the franchise trade law and the best trade standard of the Fair Trade Commission. Overlapping regulations by the suitable business type designation is an excessive restriction in the franchise industry. Now, it is necessary to establish in the domestic franchise industry an environment where a global franchise corporation, which spreads Korean culture around the world, is capable of growing, and the active support by the government is needed. Therefore, systems that do not consider the process or background of the growth of franchise businesses and harm these businesses for the sole reason of them being large corporations must be removed. The inhibition of growth to franchise enterprises may decrease the sales of franchise stores, in some cases even bankrupt them, as well as cause other problems. Therefore the suitable business type system should not hinder large corporations, and as both small dealers and small to medium size businesses both aim at improving competitiveness and combined growth, large corporations, small dealers and small to medium sized businesses, based on their mutual cooperation, should not include franchise corporations that continue business relations with them in this system.

• Journal of Global Scholars of Marketing Science
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• v.19 no.1
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• pp.37-46
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• 2009

The Census Bureau of the Department of Commerce announced in May 2008 that U.S. retail e-commerce sales for 2006 reached $ 107 billion, up from $ 87 billion in 2005 - an increase of 22 percent. From 2001 to 2006, retail e-sales increased at an average annual growth rate of 25.4 percent. The explosive growth of E-Commerce has caused profound changes in marketing channel relationships and structures in many industries. Despite the great potential implications for both academicians and practitioners, there still exists a great deal of uncertainty about the impact of the Internet channel introduction on distribution channel management. The purpose of this study is to investigate how the ownership of the new Internet channel affects the existing channel members and consumers. To explore the above research questions, this study conducts well-controlled mathematical experiments to isolate the impact of the Internet channel by comparing before and after the Internet channel entry. The model consists of a monopolist manufacturer selling its product through a channel system including one independent physical store before the entry of an Internet store. The addition of the Internet store to this channel system results in a mixed channel comprised of two different types of channels. The new Internet store can be launched by the independent physical store such as Bestbuy. In this case, the physical retailer coordinates the two types of stores to maximize the joint profits from the two stores. The Internet store also can be introduced by an independent Internet retailer such as Amazon. In this case, a retail level competition occurs between the two types of stores. Although the manufacturer sells only one product, consumers view each product-outlet pair as a unique offering. Thus, the introduction of the Internet channel provides two product offerings for consumers. The channel structures analyzed in this study are illustrated in Fig.1. It is assumed that the manufacturer plays as a Stackelberg leader maximizing its own profits with the foresight of the independent retailer's optimal responses as typically assumed in previous analytical channel studies. As a Stackelberg follower, the independent physical retailer or independent Internet retailer maximizes its own profits, conditional on the manufacturer's wholesale price. The price competition between two the independent retailers is assumed to be a Bertrand Nash game. For simplicity, the marginal cost is set at zero, as typically assumed in this type of study. In order to explore the research questions above, this study develops a game theoretic model that possesses the following three key characteristics. First, the model explicitly captures the fact that an Internet channel and a physical store exist in two independent dimensions (one in physical space and the other in cyber space). This enables this model to demonstrate that the effect of adding an Internet store is different from that of adding another physical store. Second, the model reflects the fact that consumers are heterogeneous in their preferences for using a physical store and for using an Internet channel. Third, the model captures the vertical strategic interactions between an upstream manufacturer and a downstream retailer, making it possible to analyze the channel structure issues discussed in this paper. Although numerous previous models capture this vertical dimension of marketing channels, none simultaneously incorporates the three characteristics reflected in this model. The analysis results are summarized in Table 1. When the new Internet channel is introduced by the existing physical retailer and the retailer coordinates both types of stores to maximize the joint profits from the both stores, retail prices increase due to a combination of the coordination of the retail prices and the wider market coverage. The quantity sold does not significantly increase despite the wider market coverage, because the excessively high retail prices alleviate the market coverage effect to a degree. Interestingly, the coordinated total retail profits are lower than the combined retail profits of two competing independent retailers. This implies that when a physical retailer opens an Internet channel, the retailers could be better off managing the two channels separately rather than coordinating them, unless they have the foresight of the manufacturer's pricing behavior. It is also found that the introduction of an Internet channel affects the power balance of the channel. The retail competition is strong when an independent Internet store joins a channel with an independent physical retailer. This implies that each retailer in this structure has weak channel power. Due to intense retail competition, the manufacturer uses its channel power to increase its wholesale price to extract more profits from the total channel profit. However, the retailers cannot increase retail prices accordingly because of the intense retail level competition, leading to lower channel power. In this case, consumer welfare increases due to the wider market coverage and lower retail prices caused by the retail competition. The model employed for this study is not designed to capture all the characteristics of the Internet channel. The theoretical model in this study can also be applied for any stores that are not geographically constrained such as TV home shopping or catalog sales via mail. The reasons the model in this study is names as "Internet" are as follows: first, the most representative example of the stores that are not geographically constrained is the Internet. Second, catalog sales usually determine the target markets using the pre-specified mailing lists. In this aspect, the model used in this study is closer to the Internet than catalog sales. However, it would be a desirable future research direction to mathematically and theoretically distinguish the core differences among the stores that are not geographically constrained. The model is simplified by a set of assumptions to obtain mathematical traceability. First, this study assumes the price is the only strategic tool for competition. In the real world, however, various marketing variables can be used for competition. Therefore, a more realistic model can be designed if a model incorporates other various marketing variables such as service levels or operation costs. Second, this study assumes the market with one monopoly manufacturer. Therefore, the results from this study should be carefully interpreted considering this limitation. Future research could extend this limitation by introducing manufacturer level competition. Finally, some of the results are drawn from the assumption that the monopoly manufacturer is the Stackelberg leader. Although this is a standard assumption among game theoretic studies of this kind, we could gain deeper understanding and generalize our findings beyond this assumption if the model is analyzed by different game rules.